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REFINERY NEWS ROUNDUP: August runs in India fall on lockdown

Average capacity utilization for all categories of refineries in India declined to 76% in August from 83% in the previous month, the latest survey of the oil ministry showed.

Analysts attributed the lowest runs in three months to the twin factor of lockdown being reimposed in many states to combat the spread of coronavirus pandemic and maintenance shutdown at many refineries.

The run rate was 104% in the year-ago period.

Refineries like Indian Oil Corp’s Paradip, Reliance’s export-oriented unit, and Hindustan Petroleum Corp. Ltd’s Vizag refinery carried out maintenance programs at a time when retail demand is low due to the COVID-19 impact.

In August, state-run refineries recorded 74% runs, compared with 104% a year before and 86% in July.

The flagship state-run refiner IOC recorded an average 67% combined run for all its nine standalone refineries compared with 102% in the year-ago period and 91% in July.

India’s No. 2 state-run refiner Bharat Petroleum Corp. Ltd. registered 75.5% run in August compared with 118% in the year-ago period and 83% in July.

HPCL recorded a run rate of 98% in August as compared with 117% in the year-ago period and 101% in July. Its refinery in Mumbai had a full run in August.

In the joint-venture refineries category, overall runs stood at 96% in August compared with 102% in the year-ago period and 89% in July, with the refinery at Bhatinda in Punjab registering 109% last month compared with 103% from a year-ago.

Private refineries recorded a 79% run in August compared with 104% a year-ago and 78% in July.

The private refiners’ lower run rate was mainly due to lower processing at Reliance-operated export focused units at 46% due to maintenance shutdown of a crude distillation unit at its Jamnagar complex and Rosneft part-owned Nayara Energy at 91%.

Reliance’s domestic focused processing unit operated at 108% in August compared with 101% a year-ago and 101% in July.

Reliance’s combined run was 76% in August compared with 104% a year-ago.

India’s gasoline exports hit an eight-month low in August, as turnarounds at privately owned Reliance Industries Ltd’s Jamnagar facility as well as continued recovery in domestic gasoline demand squeezed available export barrels.

** Indian Oil Corp. is running at a 70%-75% rate at its nine refineries because retail fuel demand has yet to pick up, company officials said Sept. 21.

** BPCL raised the operating rate of its Mumbai refinery to 80% of capacity in September.

** Chennai Petroleum Corporation Ltd. is running its Manali refinery at 75% as retail demand for oil products has improved with the unlocking of the local economy in and around the southern state of Tamil Nadu.

** Numaligarh Refinery Ltd. was operating at 90% as retail fuel demand has picked up with the unlocking of the economy in Northeast India.

** India’s MRPL was running at 70% as diesel demand in south Indian retail markets has picked up with the unlocking of the economy.

** South Korea’s SK Energy’s Ulsan crude run rate fell to 77% in Q2, the lowest on record and down from 90% a year earlier and 92% in Q1. “The company plans to raise crude throughput in a gradual manner in the third and fourth quarters as refining margins are likely to improve,” an official said. “We expect the company’s crude run rate in Q3 to be around 80-85%,” he added.

** SK Energy’s refining affiliate SK Incheon Petroleum, which runs two CDUs with a combined 275,000 b/d of capacity and a 100,000 b/d condensate splitter at Incheon on the west coast, will not reduce its run rate in Q3 because it is already low, an official said. SK Incheon’s crude run rate averaged at 76% in Q2, down from 84% a year earlier and 80% in Q1.

** Pilipinas Shell Petroleum Corp. will be shutting down its Tabangao refinery, transforming the facility into an import terminal, the company said in a statement. The refinery has been shut since May 24, having been idled due to weak domestic product demand.

** New Zealand’s Refining NZ is committed to transitioning its Marsden Point refinery into an oil product import terminal and will maintain low operating rates throughout 2020 in anticipation of prolonged weak refining margins.

** Australia’s second-largest refiner Viva Energy has again signaled the possible closure of its Geelong refinery amid thin margins and prolonged lackluster demand for refined oil products amid the extension of movement restrictions in the state of Victoria to contain a second wave of coronavirus infections. “The company is assessing other options to address operating losses, including the possibility of moving to a full shutdown of the facility,” Viva Energy said in a statement on its website.

** Thailand’s PTT Global Chemical plans to cut run rates at its refinery in Map Ta Phut to 80% in September, from 90% in August.

** Indonesia’s Pertamina plans to skip exports of low sulfur fuel oil cargoes from its Balikpapan refinery for loading in September as the company has been operating the refinery at reduced rates, trade sources said.

** Vietnam’s Nghi Son refinery will keep its operating run rate above 100% of its capacity in the near term, unchanged from August, even as a buildup of inventory pressures domestic buyers, industry sources with close knowledge of the matter said. “For now, the plant is running at above full rates to make up for the loss of output from Dung Quat [refinery],” one source said. State-run PetroVietnam’s Binh Son Refining and Petrochemical had shut its Dung Quat facility on Aug. 12 for planned maintenance, and will only begin the restart process on Oct. 1.

New and ongoing maintenance

New and revised entries

Asia-Pacific

** South Korea’s S-Oil targets restart of Onsan No. 2 RFCC by the week of October 3. S-Oil shut the 76,200 b/d No. 2 RFCC unit at its Onsan refinery Sept. 8 due to a mechanical problem. The refinery’s 73,000 b/d No. 1 RFCC was not been affected, and is operating “as per normal,” a source said. Separately, S-Oil Corp shut its 57,000 b/d residue hydro-desulfurization unit at the end of August for turnaround and plans to restart the unit by the end of September, a company source said.

India

** India’s No. 2 refiner Bharat Petroleum Corp. has restarted its continuous catalytic reformer, or CCR, at the Mumbai refinery earlier in the week starting Sept. 20, a company source said. The unit had undergone a planned turnaround since Aug. 8-10. BPCL is currently running its Mumbai refinery an average of 81% capacity in September, the source said. This is higher than the 60%-70% operation rate of August.

Existing entries

Asia-Pacific

** Australia’s second-largest refiner Viva Energy has again signaled the possible closure of its Geelong refinery amid thin margins and prolonged lackluster demand for refined oil products amid the extension of movement restrictions in the state of Victoria to contain a second wave of coronavirus infections. “The company is assessing other options to address operating losses, including the possibility of moving to a full shutdown of the facility,” Viva Energy said in a statement on its website.

** Thai oil and petrochemical company IRPC Public Co. Ltd has taken several refining units offline after a fire at its Rayong facility in early September, industry sources with knowledge of the matter said. The units shut include a atmospheric residue desulfurization unit and residual deep catalytic cracker, sources said, adding that it was not yet clear when the units would come back online. The refinery had also taken a 25,000 b/d atmospheric residue desulfurization unit offline for catalyst changing in Q1, the company said in a Q1 report in May.

** Taiwan’s Formosa Petrochemical expects to restart its fire-hit No. 2 residue desulfurization unit in Mailiao in April 2021 at the earliest, a company official said. The unit was shut on July 15 after a fire broke out. “It is still not clear, but we expect to restart the unit over April-September next year,” the company official said. Following the shutdown of the RDS unit, the company also shut a nearby residual fluid catalytic cracking unit Aug. 10 for an extended period to undergo repair works.

** Pilipinas Shell Petroleum Corp. will be shutting down its Tabangao refinery, transforming the facility into an import terminal, the company said in a statement released on its website Aug. 13. The refinery has been shut since May 24, having been idled due to weak domestic product demand.

** New Zealand’s Refining NZ is committed to transitioning its Marsden Point refinery into an oil product import terminal and will maintain low operating rates throughout 2020 in anticipation of prolonged weak refining margins, the company said. “The company is now developing plans to simplify refinery operations and structurally reduce operating costs, making the business robust to an extended period of low-margins,” the company said in a statement. “Simplification of our refinery creates the time and optionality to continue refining operations in the near term while we assess the potential option to transition to an import terminal in the future,” Refining NZ’s CEO Naomi James said in the statement.

** State-run PetroVietnam’s Binh Son Refining and Petrochemical (BSR) on Aug. 12 began reducing capacity at the Dung Quat refinery for planned maintenance, a source at BSR said. Previously the shutdown process had been scheduled to begin on Aug. 10 but the plan has been adjusted due to human resource changes, the source said. Under the new plan, the entire refinery will be shut in two to three days so the maintenance work, which is scheduled to last until Oct. 1, can begin.

** South Korea’s SK Energy plans to shut its 170,000 b/d No. 3 crude distillation at Ulsan for several weeks’ maintenance in the fourth quarter, along with a 80,000 b/d No. 2 residue hydro-desulfurization unit, a company official said. SK Energy has five CDUs with a combined capacity of 840,000 b/d at its Ulsan complex.

** Sri Lankan Ceylon Petroleum Corp.’s Sapugaskanda refinery in 2021 is slated to undergo “a predicted full shutdown [that] is scheduled every two years generally,” the company said in the statement. The exact period and duration of the turnaround has yet to be announced.

Upgrades

New and revised entries

** Hengyi Industries plans to more than double the capacity at its integrated refinery and aromatics complex in Brunei to around 455,000 b/d, from its current 160,000 b/d, over three years, the company said in a statement. The expansion will raise the refinery’s gasoline output by 2.55 million mt/year, gasoil by 1.94 million mt/year, jet fuel by 1.84 million mt/year and LPG by 190,000 mt/year, according to the statement released the week ended Sept. 18. The refinery currently has a combined gasoline, diesel and jet fuel output of around 6 million mt/year. There are also plans to increase olefin/polyolefin production capacity.

Existing entries

** Indian Oil Corp. owned Paradip refinery will install the first stage of a Grassroot Needle Coker Unit by using its own in-house technology, company officials said Sept. 1. The proposed unit will have a Calcined Needle Coke, or CNC, production capacity of 56 kilotons/year. Currently, the entire Needle Coke requirement of the country (80-100 kilotons/year) is met via imports.

** Pakistan Refinery has issued shares in order to upgrade and expand the plant into a deep conversion refinery, according to market sources and company documents. The proceeds will be used to revamp units and increase the gasoline and diesel yield. Following the sale of shares, Pakistan State Oil, the state-run biggest retail supplier of motor gasoline and diesel, and the refinery’s biggest shareholder, increased its share in the refinery to 63.56% from 60%, Pakistan State Oil said in a filing to Pakistan Stock Exchange on July 29. It bought 40% of the right shares that Pakistan Refinery issued. Banks, pension funds, the general public and Hascol Ltd. own the rest of the shares.

** Indonesia’s Pertamina is planning to build a petrochemical plant at its Balongan refinery in West Java and will cooperate in the project with Taiwan’s CPC. The project is expected to be completed in 2026 and once it is on stream Indonesia will reduce imports of petrochemical products. Pertamina will build the project in three phases. The first phase is to increase refining capacity from to 150,000 b/d by 2022 from 125,000 b/d currently. The second and third phase will increase the product yield from the refinery, including from the new petrochemical plant. Under the plan, Pertamina and CPC will build a naphtha cracker that is expected to substitute imports. The naphtha cracker will produce at least 1 million mt/year of ethylene. Pertamina is also cooperating with Abu Dhabi National Oil Company (ADNOC) in the Balongan refinery project.

** Indonesia’s Pertamina will go ahead and revamp its Cilacap refinery without Saudi Aramco, raising capacity from 348,000 b/d to 370,000 b/d, a company spokesperson said. The company had signed a heads of agreement on the revamp project in November 2015 with the Saudi oil major, but Aramco did not accept the figure that Pertamina had given on asset valuation, Platts has reported. Pertamina now plans to find other partners to work on the project, Fajriyah Usman said. Originally the project was expected to be completed in 2022 but now it may be delayed to 2023, she added. After the project is completed, Pertamina will be able to produce an additional 80,000 b/d of gasoline, 60,000 b/d of diesel and 40,000 b/d of jet fuel from Cilacap. The project includes increasing the crude distillation unit’s capacity; raising the residual fluid catalytic cracking unit’s capacity from 62,000 b/d to 81,000 b/d and adding a new 43,000 b/d hydro cracking unit.

** SK Energy has delayed full operation at its newly built 40,000 b/d desulfurization unit due to “deterioration in market conditions” in the wake of the coronavirus pandemic. The refiner completed mechanical construction of the vacuum residue desulfurization, or VRDS, unit on January 31, three months ahead of original schedule, to supply IMO 2020 low sulfur marine fuels to the market. The company previously aimed to start commercial production by the end of March.

** HPCL’s $3.2 billion project to expand Vizag’s capacity to 300,000 b/d is in advance stage of completion, company officials said. Originally, the expansion project was scheduled for completion in July 2020. But officials did not provide any specific timeframe for the completion of the project. The project aims to install primary processing units such as a CDU, replacing one of the three existing CDUs, a hydrocracker, and a naphtha isomerization unit.

** Pakistan’s Byco Petroleum Pakistan on its website said it plans to build an aromatics plant with a capacity of 27,300 b/d to produce benzene, mixed xylene, paraxylene, orthoxylene, C9 and raffinate.

** Hyundai Engineering has won a $2.17 billion deal to upgrade the Balikpapan refinery in Indonesia. Hyundai Engineering will “be responsible for the engineering, procurement and construction for the facility upgrade,” which would take 53 months for completion and increase the refinery’s capacity from 260,000 b/d to 360,000 b/d. Completion was expected in 2023. Separately, Indonesia’s Pertamina and Mubadala signed a Refinery Investment Principle Agreement to evaluate any possibility to cooperate in processing sector, including to accelerate Pertamina’s Balikpapan project that is expected to require about $5.5 billion of investment.

** IOC’s refinery in the western state Gujarat will have the largest capacity among its portfolio of refineries by 2022-23, company officials said. IOC plans to raise the capacity of the Gujarat refinery to 360,000 b/d by March 2023 from the current 275,000 b/d.

** IOC plans to expand the atmospheric and vacuum unit at its Barauni refinery to boost its overall capacity to 9 million mt/year by 2021.

** At Thailand’s Bangchak Petroleum an expansion plan is under way to ramp up the 120,000 b/d refinery’s production capacity to 140,000 b/d in 2020, through installation of a continuous catalyst regeneration unit. Under the expansion plan, the company will also debottleneck the hydrocracker, which could expand the refinery’s production capacity by 10%.

** Saudi Aramco and S-Oil signed a memorandum of understanding to collaborate on a $6 billion steam cracker and olefin downstream project at Onsan due for completion in 2024, which will produce ethylene and other basic chemicals from naphtha and off-gas.

** ExxonMobil announced a final investment decision at its Singapore complex. The project includes an expansion aimed at converting “fuel oil and other bottom-of-the-barrel crude products into higher-value lube base stocks and distillates.” Startup is set for 2023. The expansion will add capacity to increase cleaner fuels output with lower sulfur content by 48,000 b/d.

** Reliance Industries Ltd. has received clearance to raise the capacity of its export-oriented Jamnagar refinery on the west coast of India by 17% to 41 million mt (820,000 b/d). By 2030, RIL aims to raise its total refining capacity — including its domestic-focused refinery — at Jamnagar to 98.2 million mt/year. Reliance currently is 1.37 million b/d, of it 707,000 b/d for the export and 660,000 b/d domestic. The export one will increase capacity to 820,000 b/d. By 2030, it aims to raise its overall capacity to 1.96 million b/d.

** India’s IOC plans to raise the capacity of its Panipat refinery to 25 million mt/year by 2021 to meet growing demand for oil products. The refinery’s capacity is 15 million mt/year.

** India’s cabinet has approved a project to expand the capacity of the Numaligarh refinery to 9 million mt/year from 3 million mt/year.

** Nayara Energy is seeking the renewal of environmental approval to double capacity at its Vadinar refinery as the previous approval had been given to Essar Oil. It had planned to double the refining capacity at Vadinar to 40 million mt/year.

** Petron plans to expand and upgrade its Bataan refinery in Limay, increasing its capacity by 55% to produce 75,000 b/d of refined products and 1 million mt/year of aromatics. There was no timeline for when the expansion will take place. The refinery’s capacity will be increased by 100,000 b/d of condensates and light crude oils, from current capacity of 180,000 b/d.

** IOC has signed up energy technology and infrastructure solutions provider CB&I for a residue upgrading unit at its Mathura refinery in north India.

** The Philippines’ Petron Corp. has been considering a plan to more than double capacity at its 88,000 b/d Port Dickson refinery in Malaysia by 2020 to 178,000 b/d.

Launches

Existing entries

** Pak-Arab Oil Refinery Limited will start physical works on its coastal refinery in H1 2021, after almost 13-years of consecutive delays to the project, industry sources with close knowledge of the matter said. Following the start of the works, the refinery is expected to come online in 2025-2026, and will increase the country’s refining capacity by 250,000 b/d. PARCO also operates the 100,000 b/d Mid-Country Refinery in Mahmoodkot. The project for the coastal refinery was approved in 2007, but construction was subsequently delayed due to issues regarding funding.

** Infrastructure for Mongolia’s first refinery in Dornogobi (Dornogovi) has been completed with construction of the groundwork for the refinery’s site underway, according to local media report. At a government meeting, the importance of completing the project on time has been highlighted. It is operated by the state owned Mongolian Oil Refinery. Negotiations with the company for an EPC contract have been completed and preparations are underway for signing the contract. A working group will be set to accelerate the completion of the project. Mongolia’s first refinery is expected to reach full capacity by 2026, S&P Global Platts has previously reported.

** Malaysia’s Pengerang Refining and Petrochemical, also known as PRefChem or RAPID, plans to delay the restart its fire-hit refinery in the southern state of Johor from September to early 2021, following which, operations at the integrated petrochemical complex will resume, sources with direct knowledge of the matter told S&P Global Platts. This was due to “economic reasons,” a source close to the matter said. The restart had earlier been scheduled for September, with full commercial operations targeted for late 2020, Platts reported earlier. The refinery was shut March 15 due to an explosion at a diesel hydrotreater unit that led to five fatalities, Platts reported at the time. The resulting feedstock disruption led to the shutdown of its naphtha-fed steam cracker and downstream petrochemical plants. This was the second major incident at the Pengerang Integrated Complex, which was started up in Q3 2019. In April 2019, there was an explosion and fire at the atmospheric residue desulfurization unit when the refinery was in the commissioning stage.

** Indonesia’s Pertamina decided to postpone the construction of a proposed 300,000 b/d Bontang refinery in East Kalimantan, a senior official said. “Bontang is still on the list, but currently we are focusing on the existing ones,” Pertamina’s mega project refinery and petrochemical director Ignatius Tallulembang said, adding that upgrading the existing refineries is “our priority”. Ignatius Tallulembang said that the construction has been going on “but our partner stopped. So we hold the project while we are assessing more detail on oil supply and demand. If everything is clear, we will discuss again with our stake holders.” The proposed refinery is targeted to produce at least 60,000 b/d of gasoline and 124,000 b/d of diesel and the products will meet Euro IV specifications, with Pertamina prioritizing domestic marketing first.

** A Rosneft and Pertamina joint venture has signed a contract with Spanish Tecnicas Reunidas to design the construction of an oil refinery and petrochemical complex in Tuban, Indonesia, Rosneft said. Commissioning of the plant in East Java is expected within the next five years. Primary processing design capacity is planned at up to 15 million mt/year, planned capacity at the petrochemical complex includes more than 1 million mt/year for ethylene and 1.3 million mt/year for aromatic hydrocarbons.

** Sri Lanka has approved a $20 billion refinery project at the port town of Hambantota. The announcement follows the inauguration of a smaller refinery complex at the port, which has backing from the Oman Oil Company.

** Iran remains open to investing in a planned expansion project by Chennai Petroleum Corp Ltd to set up a 180,000 b/d refinery at Cauvery Basin at Nagapattinam, in the southern Indian state of Tamil Nadhu, Indian oil ministry officials said. IOC holds a 51.9% share in CPCL, while NIOC holds 15.4% through Swiss subsidiary Naftiran Intertrade.

** India’s proposed new 1.2 million b/d refinery on the west coast will be commissioned in 2025, oil ministry officials said. The refinery will now be built in the Raigad district, around 100 km from Mumbai. An official at Ratnagiri Refinery & Petrochemicals Ltd. (RRPCL) said construction of the refinery complex would start in 2020.

** Global trader Vitol is looking to build a 30,000 b/d refinery in southern Malaysia’s Johor state. The project involves a simple refinery to be built at Tanjung Bin at VTTI’s ATB tank farm. ATB, or ATT Tanjung Bin Sdn Bhd, is a terminal 100% owned by VTTI. Vitol co-owns VTTI.

** Haldia Petrochemicals Ltd.’s proposal to invest $4.05 billion in an integrated refinery and petrochemicals facility in Balasore, India, has been granted approval by the Odisha government.

** Pakistan and Saudi Arabia are in talks to develop a 200,000-300,000 b/d refinery in Balochistan’s Gwadar district for $10 billion.

** A new HPCL project in Barmer, India, is due for completion by March 2023.

** India’s big refinery project in Maharashtra, being developed by state-owned IOC, HPCL and BPCL, will start up around 2022-23.
Source:Platts

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